Medical Device Tax Impedes Innovation of Medical Device Mobile Applications

On Tuesday, March 19, 2013, the Communications and Technology subcommittee of the House of Representatives Energy and Commerce Committee held its first hearing in a three-day series of hearings devoted to medical device mobile applications, a/k/a “MMAs”.  That hearing was entitled “Health Information Technologies: Harnessing Wireless Innovation.” Subcommittee Chairman Greg Walden (R-OR) opened the hearing by discussing the rapid expansion of the $25 billion per year MMA industry.  Further, he expressed apprehension regarding the Food and Drug Administration’s lack of understanding regarding an explanation of regulations it will impose on the MMAs.  He stated that the FDA’s delays may impede medical device mobile  innovation.  He also aired his reservations concerning the potential applicability of the 2.3% medical device excise tax included as part of the Affordable Care Act.  Rep. Waxman (D ““ CA) responded that he believes the retail exemption to the excise tax clearly applies in this case.  Other witnesses noted that patient safety must be balanced with support for innovation.

The panel heard testimony from six industry representatives. These are just some of the significant issues discussed by the panelists:

“1. The Expanded Care Opportunity of MMAs: The U.S. is experiencing increasing rates of chronic disease, many of which are costly and preventable. Mobile technology has become ubiquitous in American life and it provides opportunities to expand health care access to the population more broadly, particularly to under-serviced areas.

2. Lack of Regulatory Clarity Stifles Innovation: MMA innovation is burdened by lack of regulatory clarity. FDA released their draft guidance for MMA developers in mid-2011 but has not finalized it. While FDA is the best regulator in this area, the current lack of clarity has left many potential marketers on the sidelines, because they are not able to accept the potential regulatory risk of enforcement.”

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